Prediction markets tell stories through probability trend charts—a format once confined to niches like politics and sports due to the lack of widely accepted prediction odds.

Prediction markets solve the problem of narrative scalability by allowing any event to generate a probability path through contract definitions. However, early stages suffered from limited liquidity due to insufficient participation.

In recent years, prediction markets have entered mainstream culture through viral social media spread. For instance, screenshots of Taylor Swift's marriage contract attracted massive attention and liquidity.

Social media users have become new participants, "breaking the fourth wall" by sharing prediction path screenshots, enhancing contract visibility and engagement.

Examples include successful long-shot bets on papal elections and prediction markets outperforming polls in the 2024 presidential election, showcasing their rise as both information tools and pop culture elements.

Prediction markets not only provide practical information but also introduce accountability and social roles, driving new memes and heroic figures onto timelines.

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Summary

Written by: Alex Danco

Compiled by: ShenchaoTechFlow

In the mid-2010s, a new form of visual content began appearing around elections, sports matches, and playoff competitions: the "probability-over-time" chart. These charts are compelling because they tell captivating stories—what was initially expected to happen versus what actually unfolded.

Through these images, you can tell many fascinating stories. Just by tracking probability changes, you can narrate tales of collapse, redemption, or underdog triumphs. (Kurt Vonnegut famously named many such stories, like "Man in a Hole," "Boy Meets Girl," and "From Bad to Worse," each with its own shape.) These images are a form of "meme": they compress vast amounts of information into a compact space and convey the full story when shared.

Despite their appeal, these charts have a major limitation: they almost exclusively exist in politics, sports, or financial markets. The reason is obvious: these charts require widely accepted prediction odds to function, and those odds must be legitimate. Financial markets have always had such odds; elections have poll data that can be used to construct probability paths, as Nate Silver did. Sports seasons (even individual games) have clear structures and sufficient historical data to confidently predict playoff probabilities mid-season. Beyond these areas, the "story shape" format couldn't penetrate deeper into popular culture.

The Slow Arrival of Prediction Markets

Prediction markets solve this problem in an obvious way. As long as you can define a contract and its resolution terms, we now have a method to make these "prediction shapes" appear for any story unfolding in the world. Popular predictions—the essential ingredient for such stories—have shifted from scarcity to abundance.

In reality, these markets didn't emerge overnight or even initially take off. In early 2024, Works in Progress published an article titled "Why Prediction Markets Are Unpopular." It argued that "there is little natural demand for prediction market contracts" because the three traditional groups of market participants—savers (seeking wealth accumulation), passionate bettors (wagering for excitement), and savvy traders (profiting from market distortions caused by the first two groups)—had no particular reason to engage in prediction markets. Savers might buy market indices for long-term wealth growth, but they had no reason to bet on presidential election outcomes. Passionate bettors might be more inclined, but they had more exciting speculative avenues (e.g., day trading, meme coins, or sports betting) than predicting state senate elections. With low participation from the other two groups, savvy traders saw little profit potential in entering the market.

Due to limited involvement from these three groups, prediction markets were doomed to remain illiquid and relatively useless for forecasting the future. This view was further validated by prediction markets' poor performance in forecasting the 2022 midterm elections.

However, in the year and a half since that article was published, things have changed intriguingly: prediction markets have rapidly entered mainstream popular culture. As the massive betting volumes on weekly sports games would predict, the largest markets are in sports. But they have successfully penetrated mainstream culture—even becoming the subject of a South Park episode—while also covering markets ranging from New York City mayoral election results to Federal Reserve policy rate paths and Taylor Swift's marriage timeline.

Breaking the "Fourth Wall"

What has changed over the past two years? There likely isn't a one-size-fits-all solution. The 2024 election certainly helped: Americans have a long history of betting on elections, and prediction market trading volume grew 42-fold from early June to election week. But the momentum didn't fade after the election.

A key player in this positive feedback loop is a new type of market participant that didn't exist a few years ago but is now ubiquitous. This participant resembles promoters in traditional betting activities, like Las Vegas boxing match promoters. They are ordinary social media users, and they represent a new meme format—posting prediction path screenshots.

Prediction markets today aren't just about classic market dynamics; they're also about social media-driven virality. The key behavioral mechanism is posting screenshots when prediction contracts become topical, thereby drawing attention and liquidity to the contracts.

A great example is a popular culture contract on the Kalshi platform: "Will Taylor Swift and Travis Kelce get married in 2025?" If you look at the chart, you'll notice two important things happened on August 26, when Swift and Kelce announced their engagement on Instagram. First, a surge in odds; second, a significant increase in liquidity as people started paying attention to the contract. While some liquidity surge would have occurred regardless, there's no doubt that these screenshots shared at critical moments constituted the contract's virality and served as an entry point for people to place bets. This "breaking the fourth wall" phenomenon suddenly made a broader audience aware of the meme (or more accurately, the reason to follow the contract), adding an intriguing new meta-element to future stories.

New "Protagonists" on the Timeline

Betting on the Pope is said to be the "original prediction market," and recently, this tradition witnessed a glorious return. For Catholics worldwide, it was a great moment as Cardinal Robert Prevost became the first American pope—Pope Leo XIV. For betting markets, it was also a great moment, as few considered him a competitive candidate: most attention was focused on favorites like Pietro Parolin and Luis Antonio Tagle.

The day after the smoke cleared, @Domahhhh on X shared the true essence of the timeline: a detailed breakdown of his thought process and bet sizes in the days leading up to the conclave and during the critical moments between the decision and the announcement.

In his words: "As a directional bet, I decided to wager a large sum that the next pope would not be [the two frontrunners, Parolin and Tagle].

After the fourth ballot, white smoke rose (indicating a new pope had been successfully elected). Relatively speaking, this was fast. The logical conclusion (which I immediately thought of) was that someone with strong support in the first ballot had consolidated votes and become pope. Parolin's odds rose to about 65%. Tagle held at around 20%. These two had an 85% chance of becoming pope, and honestly, though it seems extremely wrong in hindsight, it was hard to feel it was that mistaken at the time. I was sure I had lost a large sum! I decided not to throw good money after bad and not bet more on Tagle/Parolin. I would accept my loss like a good boy.

But I did browse the list of other options. When two people are trading at over 85%, everyone else is in the clearance bin. I rummaged through the bargain bin and found Texon at 100-to-1 and Prevost at 200-to-1. In hindsight, I should have bought Grech at his price then.

I knew one piece of information: four ballots total. That was too fast for a dark horse. Throw all dark horse lottery tickets in the trash. You need someone with the strength to secure two-thirds of the votes in a relatively short time. And those two were my picks. While other traders focused on Tagle/Parolin, I bought thousands of shares each.

Minutes later, I was astonished to see Prevost—whose shares I had bought at 200-to-1 just 20 minutes earlier—step onto the balcony as pope."

There used to be a joke: "There's a protagonist on the timeline every day, and the goal is never to be the protagonist." This "victorious prediction poster" is a new kind of protagonist, able to become a brief certified hero.

Placing the Bets

The 2024 presidential election brought a deserved redemption story for prediction markets. It began with the prolonged process of Biden exiting the race, during which prediction markets served as a useful quantitative tool to measure the impact of various events on the probability of the president dropping out. Everyone from journalists to Wall Street traders began relying on prediction markets alongside traditional polls and commentary tools. Ultimately, despite criticism throughout the campaign about influence from "whale" traders, prediction markets outperformed the polls. A year later, Kalshi's daily trading volume now surpasses levels seen during the 2024 election (at least during football seasons).

Prediction markets now represent something significant beyond their utility as financial tools or information sources. They represent accountability and a new role on the timeline: "the hero who made a brave decision" or "the fool who made a poor decision." These individuals are now pushed to the forefront, becoming Vonnegut-esque caricatures, as if characters from his short stories.

In politics, business, and culture, we demand that our leaders and public figures genuinely guide our institutions toward successful futures. This means making bold decisions and proving them right. Over the past few decades, there has been a widespread public sense that we've slipped into a culture lacking accountability among leaders, and we appreciate it even more when individuals step up to counter this trend.

This may be the primary mechanism by which prediction markets are set to change the trajectory of popular culture: not only because betting itself is an information flow that directs attention where needed, but also because the path from prediction start to completion brings new memes to the timeline and pushes new roles to the forefront.

Prediction markets tell stories through probability trend charts—a format once confined to niches like politics and sports due to the lack of widely accepted prediction odds.

Prediction markets solve the problem of narrative scalability by allowing any event to generate a probability path through contract definitions. However, early stages suffered from limited liquidity due to insufficient participation.

In recent years, prediction markets have entered mainstream culture through viral social media spread. For instance, screenshots of Taylor Swift's marriage contract attracted massive attention and liquidity.

Social media users have become new participants, "breaking the fourth wall" by sharing prediction path screenshots, enhancing contract visibility and engagement.

Examples include successful long-shot bets on papal elections and prediction markets outperforming polls in the 2024 presidential election, showcasing their rise as both information tools and pop culture elements.

Prediction markets not only provide practical information but also introduce accountability and social roles, driving new memes and heroic figures onto timelines.

---

Summary

Written by: Alex Danco

Compiled by: ShenchaoTechFlow

In the mid-2010s, a new form of visual content began appearing around elections, sports matches, and playoff competitions: the "probability-over-time" chart. These charts are compelling because they tell captivating stories—what was initially expected to happen versus what actually unfolded.

Through these images, you can tell many fascinating stories. Just by tracking probability changes, you can narrate tales of collapse, redemption, or underdog triumphs. (Kurt Vonnegut famously named many such stories, like "Man in a Hole," "Boy Meets Girl," and "From Bad to Worse," each with its own shape.) These images are a form of "meme": they compress vast amounts of information into a compact space and convey the full story when shared.

Despite their appeal, these charts have a major limitation: they almost exclusively exist in politics, sports, or financial markets. The reason is obvious: these charts require widely accepted prediction odds to function, and those odds must be legitimate. Financial markets have always had such odds; elections have poll data that can be used to construct probability paths, as Nate Silver did. Sports seasons (even individual games) have clear structures and sufficient historical data to confidently predict playoff probabilities mid-season. Beyond these areas, the "story shape" format couldn't penetrate deeper into popular culture.

The Slow Arrival of Prediction Markets

Prediction markets solve this problem in an obvious way. As long as you can define a contract and its resolution terms, we now have a method to make these "prediction shapes" appear for any story unfolding in the world. Popular predictions—the essential ingredient for such stories—have shifted from scarcity to abundance.

In reality, these markets didn't emerge overnight or even initially take off. In early 2024, Works in Progress published an article titled "Why Prediction Markets Are Unpopular." It argued that "there is little natural demand for prediction market contracts" because the three traditional groups of market participants—savers (seeking wealth accumulation), passionate bettors (wagering for excitement), and savvy traders (profiting from market distortions caused by the first two groups)—had no particular reason to engage in prediction markets. Savers might buy market indices for long-term wealth growth, but they had no reason to bet on presidential election outcomes. Passionate bettors might be more inclined, but they had more exciting speculative avenues (e.g., day trading, meme coins, or sports betting) than predicting state senate elections. With low participation from the other two groups, savvy traders saw little profit potential in entering the market.

Due to limited involvement from these three groups, prediction markets were doomed to remain illiquid and relatively useless for forecasting the future. This view was further validated by prediction markets' poor performance in forecasting the 2022 midterm elections.

However, in the year and a half since that article was published, things have changed intriguingly: prediction markets have rapidly entered mainstream popular culture. As the massive betting volumes on weekly sports games would predict, the largest markets are in sports. But they have successfully penetrated mainstream culture—even becoming the subject of a South Park episode—while also covering markets ranging from New York City mayoral election results to Federal Reserve policy rate paths and Taylor Swift's marriage timeline.

Breaking the "Fourth Wall"

What has changed over the past two years? There likely isn't a one-size-fits-all solution. The 2024 election certainly helped: Americans have a long history of betting on elections, and prediction market trading volume grew 42-fold from early June to election week. But the momentum didn't fade after the election.

A key player in this positive feedback loop is a new type of market participant that didn't exist a few years ago but is now ubiquitous. This participant resembles promoters in traditional betting activities, like Las Vegas boxing match promoters. They are ordinary social media users, and they represent a new meme format—posting prediction path screenshots.

Prediction markets today aren't just about classic market dynamics; they're also about social media-driven virality. The key behavioral mechanism is posting screenshots when prediction contracts become topical, thereby drawing attention and liquidity to the contracts.

A great example is a popular culture contract on the Kalshi platform: "Will Taylor Swift and Travis Kelce get married in 2025?" If you look at the chart, you'll notice two important things happened on August 26, when Swift and Kelce announced their engagement on Instagram. First, a surge in odds; second, a significant increase in liquidity as people started paying attention to the contract. While some liquidity surge would have occurred regardless, there's no doubt that these screenshots shared at critical moments constituted the contract's virality and served as an entry point for people to place bets. This "breaking the fourth wall" phenomenon suddenly made a broader audience aware of the meme (or more accurately, the reason to follow the contract), adding an intriguing new meta-element to future stories.

New "Protagonists" on the Timeline

Betting on the Pope is said to be the "original prediction market," and recently, this tradition witnessed a glorious return. For Catholics worldwide, it was a great moment as Cardinal Robert Prevost became the first American pope—Pope Leo XIV. For betting markets, it was also a great moment, as few considered him a competitive candidate: most attention was focused on favorites like Pietro Parolin and Luis Antonio Tagle.

The day after the smoke cleared, @Domahhhh on X shared the true essence of the timeline: a detailed breakdown of his thought process and bet sizes in the days leading up to the conclave and during the critical moments between the decision and the announcement.

In his words: "As a directional bet, I decided to wager a large sum that the next pope would not be [the two frontrunners, Parolin and Tagle].

After the fourth ballot, white smoke rose (indicating a new pope had been successfully elected). Relatively speaking, this was fast. The logical conclusion (which I immediately thought of) was that someone with strong support in the first ballot had consolidated votes and become pope. Parolin's odds rose to about 65%. Tagle held at around 20%. These two had an 85% chance of becoming pope, and honestly, though it seems extremely wrong in hindsight, it was hard to feel it was that mistaken at the time. I was sure I had lost a large sum! I decided not to throw good money after bad and not bet more on Tagle/Parolin. I would accept my loss like a good boy.

But I did browse the list of other options. When two people are trading at over 85%, everyone else is in the clearance bin. I rummaged through the bargain bin and found Texon at 100-to-1 and Prevost at 200-to-1. In hindsight, I should have bought Grech at his price then.

I knew one piece of information: four ballots total. That was too fast for a dark horse. Throw all dark horse lottery tickets in the trash. You need someone with the strength to secure two-thirds of the votes in a relatively short time. And those two were my picks. While other traders focused on Tagle/Parolin, I bought thousands of shares each.

Minutes later, I was astonished to see Prevost—whose shares I had bought at 200-to-1 just 20 minutes earlier—step onto the balcony as pope."

There used to be a joke: "There's a protagonist on the timeline every day, and the goal is never to be the protagonist." This "victorious prediction poster" is a new kind of protagonist, able to become a brief certified hero.

Placing the Bets

The 2024 presidential election brought a deserved redemption story for prediction markets. It began with the prolonged process of Biden exiting the race, during which prediction markets served as a useful quantitative tool to measure the impact of various events on the probability of the president dropping out. Everyone from journalists to Wall Street traders began relying on prediction markets alongside traditional polls and commentary tools. Ultimately, despite criticism throughout the campaign about influence from "whale" traders, prediction markets outperformed the polls. A year later, Kalshi's daily trading volume now surpasses levels seen during the 2024 election (at least during football seasons).

Prediction markets now represent something significant beyond their utility as financial tools or information sources. They represent accountability and a new role on the timeline: "the hero who made a brave decision" or "the fool who made a poor decision." These individuals are now pushed to the forefront, becoming Vonnegut-esque caricatures, as if characters from his short stories.

In politics, business, and culture, we demand that our leaders and public figures genuinely guide our institutions toward successful futures. This means making bold decisions and proving them right. Over the past few decades, there has been a widespread public sense that we've slipped into a culture lacking accountability among leaders, and we appreciate it even more when individuals step up to counter this trend.

This may be the primary mechanism by which prediction markets are set to change the trajectory of popular culture: not only because betting itself is an information flow that directs attention where needed, but also because the path from prediction start to completion brings new memes to the timeline and pushes new roles to the forefront.